Shopping Cart

Bull Market

Posted by TradingDrills Academy on

The bull market refers to a financial market associated with a financial instrument in which prices are constantly rising or we expect growth in their prices. The word bull market is often used to refer to the stock market as a whole, but can be used in relation to anything that is traded, including securities, stocks, currencies, housing, and so on. 

Bull Market

Because financial markets fluctuate during the day and are constantly changing from ascending to descending and from descending to ascending, the word bull market is primarily used for longer periods of time in which prices increase. Accurately forecasting future market changes is a very difficult and complex task, due in part to the psychological reasons behind market fluctuations and the volatility of particular financial instruments, such as Brent Crude Oil. There is no universal definition for this market, but the most accepted definition refers to a growth of about 20% in prices after a 20% decline in the market and before that decline continues for another 20% in the market. Typically, a bull market can last for months, if not years on end. Because it is so difficult to predict these markets, market analysts are only able to identify them after such conditions have been created.

The basic creation of an optimistic bull market can be due to a variety of factors, including strong investor confidence, increasing GDP growth rate due to a strong economy, and low global unemployment rates. The combination of these factors, combined with a positive market sentiment causes investors to believe the market price will increase, and this will effect their trading strategy. In bull markets, a “buy and hold” strategy is popular, where traders take a long position to prepare for future profits as they expect the price of the financial instrument to keep increasing. 

To remember the ascending movement of a bull market, think of the use of the word bull as a metaphor which refers to how a wild bull attacks its prey. They crouch down and subsequently proceed to throw their horns upwards to hit their prey, which symbolizes the upward price movements of bull markets.



Older Post Newer Post


Leave a comment

Please note, comments must be approved before they are published